Reply To: Government Spending and GDP


Intermediate capital goods become part of the output that is sold to the next stage of production. So, the entrepreneur does not retain possession of intermediate capital goods. When he sells his output, they go with it. But he retains ownership of his plant, equipment, improved land, and other assets. Even though some portion of them are used up in production (and he depreciates his asset values to account for that), he retains possession of them when he sells his output.